SECURITIES AND
FUTURES COMMISSION
Guidelines on Competence
勝任能力的指引
!
!
Hong Kong
March 2003
香港
2003 年 3 月
Table of Contents
Page
1.
Introduction
1
2.
Application and Interpretation
2
3.
Fitness and Properness
4
4.
Assessment of Competence for Corporation
5
5.
Assessment of Competence for Individual
6
6.
Points to Note
10
7.
Exemptions from the Recognized Industry Qualification and
Local Regulatory Framework Paper Requirements
11
8.
Role of the Academic and Accreditation Advisory Committee
12
Appendix A - Examples of matters that will be considered by the SFC
in assessing the competence of a corporation applying to
carry on a regulated activity
13
Appendix B - Test of Competence for Responsible Officer and
Representative
17
Appendix C - Recognized Industry Qualifications and Local
Regulatory Framework Papers versus Regulated
Activities (Responsible Officer and Representative)
18
Appendix D - Exemptions from the Recognized Industry Qualification
Requirement
23
Appendix E - Exemptions from the Local Regulatory Framework
Paper Requirement
25
1.
Introduction
1.1
The Guidelines on Competence are made under section 399 of the Securities
and Futures Ordinance, Cap. 571 (“SFO”). They set out the matters that the
Securities and Futures Commission (“SFC”) will normally consider in
assessing whether a person is competent to carry on any regulated activity.
1.2
The competence requirements stemmed from the fitness and properness
requirements with the objective of ensuring a person is equipped with the
necessary technical skills and professional expertise to be "fit", and is aware
of the relevant ethical standards and regulatory knowledge to be "proper" in
carrying out regulated activities.
1.3
These Guidelines replace the 2nd Edition of the Guidance Note on
Competence issued in June 2001. They are an elaboration on the Fit and
Proper Guidelines.
1.4
These Guidelines do not have the force of law and should not be interpreted
in a way that would override the provisions of any applicable laws, codes or
other regulatory requirements. Failure to follow these Guidelines may reflect
adversely on the fitness and properness of a person to carry on any regulated
activity.
1.5
These Guidelines should be read in conjunction with the Fit and Proper
Guidelines and the Guidelines on Continuous Professional Training (“CPT”),
which set out the general expectations of what is necessary to satisfy the
requirements of fitness and properness and the continuous competence
requirements respectively.
1
2.
Application and Interpretation
2.1
These Guidelines are applicable to the following persons carrying on any
regulated activities under Part V of the SFO:
(a)
(b)
(c)
(d)
an individual who applies for licence or is licensed as a
representative;
a licensed representative who applies for approval or is approved as a
responsible officer;
a corporation which applies for licence or is licensed as a licensed
corporation; and
an authorized financial institution which applies for registration or is
registered as a registered institution.
2.2
An individual whose name is to be or is entered in the register maintained by
the Hong Kong Monetary Authority (“HKMA”) under section 20 of the
Banking Ordinance (“relevant individual”) has to meet the same competence
requirements as a representative. It is the responsibility of a registered
institution to ensure that a relevant individual meets the same competence
requirements as those applicable to a representative before submission of his
name to the HKMA for the purpose of entering in this register.
2.3
Separately, an individual who applies to the HKMA for consent or who has
been given consent to act as an executive officer of a registered institution
under section 71C of the Banking Ordinance has to meet the same
competence requirements as those applicable to a responsible officer. The
HKMA will take this into account when considering whether to grant
consent.
2.4
For the purposes of these Guidelines, corporations and authorized financial
institutions are collectively known as “corporations”. “Corporate licensees”
refer to licensed corporations or registered institutions.
“Individual
licensees” refer to individuals licensed under the SFO including responsible
officers.
2.5
Throughout these Guidelines, unless otherwise stated, where references to
“responsible officer” are made, the term covers executive officer of a
registered institution; similarly, the term “representative” covers relevant
individual (other than an executive officer) of a registered institution.
2
2.6
For paragraphs 5.1 to 7.6, and Appendices D and E of these Guidelines,
unless otherwise stated, regarding the SFC’s requirements and procedures for
an individual to demonstrate compliance with a certain requirement or seek
exemption; or a corporation to provide an undertaking,
(a)
(b)
the HKMA will adopt the same requirements and procedures for an
executive officer of a registered institution; and
for other relevant individuals, the registered institution concerned has
to ensure that such individuals comply with the corresponding
requirements, and sufficient records (with supporting documents,
where applicable) on how these requirements are satisfied should be
maintained and made available for inspection upon request from the
HKMA. While a registered institution does not have to provide an
undertaking to the HKMA in relation to a relevant individual (other
than an executive officer) seeking exemption from initial competence
requirement, it will be held responsible for ensuring that the required
actions covered under such undertaking are taken in the required
manner.
3
3.
Fitness and Properness
3.1
The SFC is obliged to refuse to grant a licence or registration if the applicant
fails to satisfy the SFC that he is fit and proper. Similarly, the HKMA is
obliged to refuse to grant consent to an individual to be an executive officer
of a registered institution unless the individual satisfies the HKMA that he is
fit and proper. Besides, it shall be a statutory condition of registration for
every registered institution that its relevant individuals are fit and proper.
Under section 129 of the SFO, the matters that shall be considered in
assessing a person’s fitness and properness include his:
(a)
(b)
(c)
(d)
financial status or solvency;
educational or other qualifications or experience having regard to the
nature of the functions to be performed;
ability to carry on the regulated activity competently, honestly and
fairly; and
reputation, character, reliability and financial integrity.
3.2
The Fit and Proper Guidelines set out the SFC’s general expectation of what
is necessary to satisfy the licensing or registration requirements that a person
is fit and proper. Among the requirements are paragraphs 5.1.1, 6.1.1 and
6.1.2 which state that individuals and corporations will generally not be
considered fit and proper unless they can demonstrate that they have the
ability to carry on the regulated activity competently.
3.3
The Fit and Proper Guidelines provides that the SFC may consider taking
disciplinary action if the corporate licensees and individual licensees are no
longer considered fit and proper. The SFC and HKMA may also consider
taking disciplinary action if the relevant individuals or executive officers of
registered institutions are no longer fit and proper. In this regard, corporate
licensees, individual licensees as well as the relevant individuals and
executive officers of registered institutions are expected to remain competent
in order to remain licensed, registered, or as relevant individuals or executive
officers as the case may be.
3.4
The expectations set out in these Guidelines are not exhaustive.
4
4.
Assessment of Competence for Corporation
4.1
In determining whether a corporation is competent to carry on any regulated
activities, the SFC will consider the corporation’s organizational structure
and the combined competence of its personnel.
4.2
A corporation should satisfy the SFC that it has proper business structure,
good internal systems and qualified personnel to enable it to properly manage
the risks it will encounter in carrying on its business as detailed in its
business plan.
4.3
Examples of matters that will be considered by the SFC in assessing the
competence of a corporation are listed in Appendix A.
4.4
Without compromising investor protection, the SFC will administer the
competence criteria on a flexible basis. Absence of the matters set out in
Appendix A will not necessarily lead the SFC to conclude that the
corporation is not competent but the SFC may call for additional explanation.
In particular, the SFC will wish to be satisfied in the particular case, either
that the matter may be unnecessary for a corporation of that size (or one
conducting that type of business), or that the objective to be served by a
particular arrangement is addressed in another manner.
4.5
For corporations in which the scale of business operation and the number of
staff are relatively small, the SFC will take into account that certain aspects
of segregation of duties may not be possible. Under such circumstances, the
SFC may consider requesting alternative arrangements, either at the company
or the group level, if the corporation can demonstrate competence in
managing its risk exposures and exercising effective control over its
operations. Clear written operational and compliance procedures should be
available.
4.6
Corporate licensees must remain competent and ensure that the individuals
they engaged remain competent including compliance with the CPT
requirements. They must also keep the SFC informed of any material
changes in their business plans, organizational structures and personnel.
5
5.
Assessment of Competence for Individual
5.1
An individual applying to carry on a regulated activity has to demonstrate
competence and satisfy the SFC that he:
(a)
(b)
(c)
has a good understanding of the regulatory framework, including the
laws, regulations and associated codes governing his intended
industry sectors;
is aware of the ethical1 standards expected of an individual licensee;
and
is knowledgeable of the financial products that he deals in or advises
upon and the markets in which he provides services.
5.2
Where an individual applies to carry on a Type 6 (advising on corporate
finance) regulated activity and intends to give advice on matters falling
within the ambit of the Codes on Takeovers and Mergers and Share
Repurchases (“Codes”), he should satisfy the SFC that he has sufficient
experience in this area. For this purpose, he has to complete the
“Questionnaire on respondent’s experience relating to the Codes”. If the
SFC is not satisfied that he is competent to acting on his own to advise on
Codes-related matters, certain conditions may be imposed on his licence
limiting the scope of his work.
5.3
Test of Competence for Responsible Officer
In assessing the competence of an individual applying to be a responsible
officer, the SFC will ensure that he possesses appropriate ability, skills,
knowledge and experience to properly manage and supervise the
corporation’s proposed activities. To be a responsible officer, he has to fulfil
four basic elements as follows:
1
One reference point is the “Ethics in Practice – A Practical Guide for Financial Practitioners” published
jointly with the Independent Commission Against Corruption, SAR in October 1999.
6
Test of Competence for Responsible Officer
4 Basic Elements
(1) Academic/
Passed one of the
Industry
recognized industry
Qualification
qualifications
•
•
•
•
•
(2) Industry
Experience
(3) Management
Experience
(4) Regulatory
Knowledge
2
3
4
Possesses 3 years relevant
industry experience over
the 6 years immediately
prior to the date of
application
Has a minimum of 2
years proven
management skill and
experience
Passed one of the
recognized local
regulatory framework
papers
Can be Compensated by
Degree in Accounting, Business
Administration, Economics,
Finance or Law; or other degree
(with passes in at least two
courses in the above
disciplines); or
Internationally recognized
professional qualifications in
Law, Accounting or Finance2; or
Passes in English or Chinese,
and Mathematics in HKCEE or
equivalent3 plus an additional 2
years relevant industry
experience4; or
An additional 5 years relevant
industry experience.
Applicant may apply for
exemption from the recognized
industry qualification
requirement if he satisfies the
exemption criteria as set out in
Appendix D of these Guidelines.
―
―
Applicant may apply for exemption
from taking the recognized local
regulatory framework paper if he
satisfies the exemption criteria as
set out in Appendix E of these
Guidelines.
Internationally recognized professional qualifications in Finance include Chartered Financial Analyst
(“CFA”), Certified International Investment Analyst ("CIIA®”) and Certified Financial Planner
(“CFP”).
All high school public examinations (such as university entry examinations) will be recognized as
equivalent to HKCEE.
In assessing the relevance of an applicant’s experience, the SFC will consider the role and functions
to be undertaken by the applicant and whether the applicant possesses the recognized industry
qualifications. Experience gained in Hong Kong or elsewhere that is closely related to the functions
to be performed will be recognized.
7
5.4
Test of Competence for Representative
In assessing the competence of an individual applying to be a representative,
the SFC will expect him to have a basic understanding of the market in which
he is to work as well as the laws and regulatory requirements applicable to
the industry. There are three basic elements for an individual seeking to be a
licensed representative:
Test of Competence for Representative
3 Basic Elements
(1) Academic
Passes in English or
Qualification Chinese, and Mathematics
in HKCEE or equivalent
(2) Industry
Passed one of the
Qualification recognized industry
qualifications
(3) Regulatory
Knowledge
Passed one of the
recognized local regulatory
framework papers
Can be Compensated by
• Degree in Accounting, Business
Administration, Economics,
Finance or Law; or other degree
(with passes in at least two
courses in the above
disciplines); or
• Internationally recognized
professional qualifications in
Law, Accounting or Finance; or
• An additional 2 years relevant
industry experience for lacking
either (1) or (2); or
• An additional 5 years relevant
industry experience for lacking
both (1) and (2).
• Applicant may apply for
exemption from the recognized
industry qualification
requirement if he satisfies the
exemption criteria as set out in
Appendix D of these Guidelines.
Applicant may apply for exemption
from taking the recognized local
regulatory framework paper if he
satisfies the exemption criteria as
set out in Appendix E of these
Guidelines.
Note: A representative engaging in a Type 3 (leveraged foreign exchange trading)
regulated activity who handles discretionary account activities has to obtain additional
3 years’ direct foreign exchange trading experience in the inter-bank foreign
exchange market or currency futures market, or its equivalent over the past 6 years.
8
5.5
A summary of the options for satisfying the competence requirements for
responsible officer and representative is attached as Appendix B.
5.6
An individual licensee, or a relevant individual (whether an executive officer
or not) of a registered institution, should comply with the CPT requirements
as set out in the Guidelines on CPT to demonstrate that he has taken steps to
remain competent.
9
6.
Points to Note
6.1
The recognized industry qualifications and local regulatory framework papers
mentioned above should be relevant to the activities to be performed by the
individual. Lists of recognized industry qualifications and local regulatory
framework papers versus each type of regulated activity are set out in
Appendix C which will be updated as and when changes occur.
6.2
For an individual who satisfies the competence requirements other than the
element of regulatory knowledge, the SFC may grant approval on condition
that he must pass a recognized local regulatory framework paper within 6
months of obtaining the approval. This will allow the applicant an
opportunity to begin carrying on regulated activities in an appropriately
supervised environment before he passes the local regulatory framework
paper. It should be noted that failure to obtain a pass within the specified
time may render the approval invalid unless a further extension of time is
granted by the SFC. The SFC may consider such an extension under
exceptional circumstances as it considers appropriate. The SFC may also
impose additional condition(s) on the individual licensee limiting the scope
of his business activities.
6.3
Applicants are expected to obtain the appropriate recognized industry
qualifications and pass the recognized local regulatory framework papers not
more than 3 years prior to the date of application.
6.4
However, the SFC and the HKMA will recognize industry qualifications
gained more than 3 years ago if the individual has substantial relevant
working experience and has remained in the industry (either in Hong Kong or
overseas) or can prove recent registration with a relevant overseas regulator.
6.5
An individual licensee seeking approval for a transfer of accreditation, or an
existing relevant individual (whether an executive officer or not) seeking to
be engaged by another registered institution, is deemed to have met the
competence requirements if he applies for the same type of regulated activity
and in the same role.
10
7.
Exemptions from the Recognized Industry Qualification and Local
Regulatory Framework Paper Requirements
7.1
The recognized industry qualification requirement is to assess whether the
individual is sufficiently knowledgeable in the financial products in which he
deals or on which he advises.
7.2
The local regulatory framework paper requirement is to ensure that the
individual has an acceptable understanding of the relevant local laws and
regulations with which he must comply when conducting the regulated
activities. This is particularly important, in light of the criminal nature of
liability that will be imposed on intermediaries for violations under the SFO.
7.3
The objective of requiring individuals engaging in regulated activities to meet
the recognized industry qualification and pass the regulatory exam is to
ensure that they are adequately equipped to carry out the regulated activities
and are aware of their legal responsibilities as well as potential liabilities.
7.4
The SFC may, at its sole discretion, consider granting exemption for an
individual from obtaining a recognized industry qualification and/or passing a
local regulatory framework paper if he can demonstrate that he possesses
qualifications comparable to those prescribed above. The SFC will review
and consider all relevant facts and circumstances presented in a pragmatic
manner in granting the exemptions. Criteria under which exemptions may be
considered are given at Appendices D and E. These criteria may be changed
and updated where necessary.
7.5
In granting the exemptions, the SFC may impose other conditions on and/or
request for the provision of undertakings to the SFC from the individuals
and/or sponsoring corporation as and when appropriate. Conditional
exemptions so granted are specific to the facts and circumstances set forth in
the application and in the context of the individual’s engagement with the
sponsoring corporation, and therefore, non-transferable. The individual may
be required to obtain a relevant industry qualification or pass a recognized
local regulatory framework paper if there are changes to his role or to the
sponsoring corporation.
7.6
A breach of any of the conditions imposed or undertakings provided shall be
deemed to be a violation of the Fit and Proper Guidelines and subject the
individual and/or the sponsoring corporation to possible disciplinary action.
11
8.
Role of the Academic and Accreditation Advisory Committee
8.1
The Academic and Accreditation Advisory Committee (“AAAC”) of the SFC
is comprised of representatives from the SFC, the industry and academic
institutions. It will consider and approve industry based qualifications and
local regulatory framework papers for meeting the competence requirements.
8.2
The AAAC will from time to time amend the list of approved qualifications
that it has endorsed for meeting the competence requirements, and the list
will be updated on the SFC website at www.hksfc.org.hk as and when
changes occur.
12
Appendix A
Examples of matters that will be considered by the SFC in assessing the
competence of a corporation applying to carry on a regulated activity
I.
Organizational Structure
(a)
Corporate Governance
the presence of an organizational structure with clear lines of
responsibility and authority
a Board of Directors and senior management, including
Committees of the Board, composed of individuals with an
appropriate range of skills and experience to understand and run
the corporation’s proposed activities
a Board of Directors and senior management, including
Committees of the Board, organized in a way that enables it to
address and control the activities of the corporation
(b)
Business Profile and Risk Profile
information on the proposed lines of business
information on target market clientele, products and service type
extent of system automation
analysis of risks inherent to the key lines of business such as
market risk, credit risk, liquidity risk and operational risk
(c)
Risk Management and Control Strategy
the presence of a clear risk management strategy with reference to
the proposed lines of business
the setting of proper exposure limits for each key line of business
the anticipated risks being supported by the available capital
(typically this will be demonstrated by a projected Financial
Resources Rules calculation, if applicable)
the timing of review of established policies (e.g. subject to regular
review or just with respect to changes in business and
markets…etc)
risk management and control strategy for branch operations
13
Appendix A (cont’d)
1
(d)
Risk Management Policy and Procedures
appointment of an independent risk manager1 who has the
appropriate qualifications to oversee and monitor the risk
exposures and systems of the corporation
the presence of clear reporting lines for the independent risk
manager
the way that risk exposure limits are set and communicated to the
responsible persons
the way that risks are being measured and monitored
the procedures to deal with exceptions to risk limits
processes to ensure that the corporation regularly carries out stress
testing using appropriate measures
(e)
Reporting and Control Functions
the presence of reliable reporting systems ensuring that robust
information is produced for risk management and decision making
purposes
the presence of control procedures to ensure data integrity and that
data flowing into the risk management system should be
consistent with trade and financial information
(f)
Internal Audit and Compliance Functions
internal audit and compliance personnel have appropriate
qualifications and working experience to understand the corporate
activities and risk profile
internal audit group and compliance personnel are independent of
core business functions and reporting directly to an independent
and high level of authority
internal audit group to perform periodic (at least annual) risk
assessment and ascribe various levels of risk to an appropriate
audit cycle
all audit findings and compliance issues that are not resolved
within established time frames must be reported to senior
management
The SFC will not insist that an independent risk manager or independent information technology manager be
appointed if there is alternative arrangement in place which is sufficient to manage business risk exposures
and exercise effective control over operations. This is irrespective of whether the alternative arrangement is
undertaken in Hong Kong or elsewhere, at the company level or group level. In any cases, there should be
clear segregation of duties; the responsibilities of the risk manager should be clearly separated from that of
front office personnel. Clearly, in most circumstances, more than one person will need to be appointed.
14
Appendix A (cont’d)
1
2
(g)
Internal Control System
adequate internal control systems set up in accordance with the
relevant codes and guidelines
arrangements in place to ensure that proper audit trails are
maintained
the presence of procedures to deal with non-compliance
requirements for the proper documentation of all operational and
control procedures2
(h)
Conflict of Interest
policies and procedures on “Chinese Walls” including “Wall
Crossing Procedure” and other control procedures to address
conflict of interest issues arising from carrying on more than one
type of regulated activities concurrently (e.g. advising on
corporate finance, securities research and asset management
activities) in the corporation or its groups
controls in place to address other conflict of interest issues, such
as employee dealing and client priority
(i)
Information Technology Support
appointment of an independent information technology manager1
who is appropriately experienced to maintain the integrity of the
corporation's operating systems
for corporations providing services over the Internet, suitably
qualified staff assigned to handle Internet communication and
transactions
sufficient capital resources to meet necessary technological
maintenance and improvements
The SFC will not insist that an independent risk manager or independent information technology manager be
appointed if there is alternative arrangement in place which is sufficient to manage business risk exposures
and exercise effective control over operations. This is irrespective of whether the alternative arrangement is
undertaken in Hong Kong or elsewhere, at the company level or group level. In any cases, there should be
clear segregation of duties; the responsibilities of the risk manager should be clearly separated from that of
front office personnel. Clearly, in most circumstances, more than one person will need to be appointed.
Proper documentation of all operational and control procedures is essential for providing staff with the
necessary guidance in running the business in accordance with the corporation’s business objectives,
professional standards and regulatory requirements.
15
Appendix A (cont’d)
II.
Personnel
(a)
Qualified Staff
the presence of policies and procedures to ensure that suitably
qualified staff are in post including, but not limited to, all licensed
individuals (or, for a registered institution, all relevant
individuals), risk managers, compliance officers, internal auditors,
information technology managers, heads of settlement and
accounting officers
all supervisory staff for both front and back offices should have
not less than 3 years relevant experience and appropriate
qualifications
(b)
Training Policies
arrangements to ensure that operational and control policies and
procedures are communicated to new recruits
arrangements to ensure that updated operational and control
manuals are distributed to staff and being accessible at all times
arrangements to ensure that any changes to operational and
control policies and procedures are communicated to staff
the presence of appropriate staff on-going training policies and
procedures
16
Appendix B
Table 1 – Test of Competence for Responsible Officer
Option 1
Option 2
Option 3
Degree in the designated fields1; or
Other degree (with passes in at least two
courses in the designated fields1); or
Professional qualifications2; or
Recognized industry qualification3.
Passes in Chin/
Eng + Maths in
HKCEE or
equivalent4
―
At least 3 yrs over past 6 yrs
At least 5 yrs over
past 8 yrs
At least 8 yrs
over past 11 yrs
Management
experience
2 yrs
2 yrs
2 yrs
Local regulatory
framework paper3
Pass
Pass
Pass
Academic / industry
qualification
Relevant industry
experience5
Table 2 – Test of Competence for Representative6
Option 1
Academic
qualification
Relevant industry
experience5
Recognized industry
qualification 3
Local regulatory
framework paper3
1
2
3
4
5
6
Degree in the designated
fields1; or
Other degree (with passes in
at least two courses in the
designated fields1); or
Professional qualifications2.
Option 2
Option 3
Passes in Chin/ Eng +
Maths in HKCEE or
equivalent4
―
―
At least 2
yrs over
past 5 yrs
―
At least 5
yrs over
past 8 yrs
At least 2
yrs over
past 5 yrs
―
―
Pass
―
Pass
Pass
Pass
Pass
Pass
Pass
“Designated fields” refer to Accounting, Business Administration, Economics, Finance and Law.
Internationally recognized professional qualifications in Law, Accounting or Finance. Internationally
recognized professional qualifications in Finance include Chartered Financial Analyst (“CFA”), Certified
International Investment Analyst ("CIIA®”) and Certified Financial Planner (“CFP”).
The recognized industry qualification and the local regulatory framework paper must not be completed more
than 3 years prior to the date of application. Applicant may apply for exemption if he satisfies the
exemption criteria as set out in Appendices D and E of these Guidelines.
All high school public examinations (such as university entry examinations) will be recognized as
equivalent to HKCEE.
In assessing the relevance of an individual’s experience, the SFC or HKMA will consider the role and
functions to be undertaken by the applicant and whether the applicant possesses the recognized industry
qualifications. Experience gained in Hong Kong or elsewhere that is closely related to the functions to be
performed will be recognized.
A representative engaging in a Type 3 (leveraged foreign exchange trading) regulated activity who handles
discretionary account activities can only go for option 1 or 2. Furthermore, he has to obtain additional 3
years’ direct foreign exchange trading experience in the inter-bank foreign exchange market or currency
futures market, or its equivalent over the past 6 years.
17
Appendix C
Table 1 – Recognized Industry Qualifications and Local Regulatory Framework
Papers versus Regulated Activities (Responsible Officer)
RA
Country
1, 4, 8 Hong
Kong
2, 5
Recognized Industry Qualifications
- HKSI DPE Papers 1+3
- HKSI LE Papers 7+8
US
-
Australia
-
UK
-
Canada
-
Japan
-
Hong
Kong
-
NASD Series 24
AIMR Chartered Financial
Analyst Designation
Diploma Courses provided by
SIA (in securities)
SFA Registered Persons Exams
(in securities)
Examinations conducted by CSI
(in securities)
JSDA Representative of Public
Securities Course
HKSI DPE Papers 1+3
HKSI LE Papers 7+9
Local Regulatory Framework Papers
HKSI DPE Paper 2
HKSI PPE Paper 1 (+2 for SEHK
participant engaging in RA1)
- HKSI LE Papers 1*+2
-
-
3
US
-
Australia
-
UK
-
Canada
-
Hong
Kong
-
US
-
NASD Series 3
AIMR Chartered Financial
Analyst Designation
Diploma Courses provided by
SIA (in derivatives)
SFA Registered Persons Exams
(in derivatives)
Examinations conducted by CSI
(in derivatives)
VTC Leveraged Foreign
Exchange Trader’s Responsible
Director Examination Paper 2
AIMR Chartered Financial
Analyst Designation
18
-
HKSI DPE Paper 2
HKSI PPE Paper 1 (+3 for HKFE
participant engaging in RA2)
HKSI LE Papers 1*+3
VTC Leveraged Foreign Exchange
Trader’s Responsible Director
Examination Paper 1
Appendix C (cont’d)
RA
6
9
Note:
Country
Hong
Kong
Recognized Industry Qualifications
- HKSI DPE Papers 1+3
- HKSI LE Papers 7+11
US
-
Australia
-
UK
-
Canada
-
Japan
-
Hong
Kong
-
US
-
Australia
-
UK
Canada
Japan
-
NASD Series 24
AIMR Chartered Financial
Analyst Designation
Diploma Courses provided by
SIA (in securities)
SFA Registered Persons Exams
(in securities)
Examinations conducted by CSI
(in securities)
JSDA Representative of Public
Securities Course
HKSI DPE Papers 1+3
HKSI LE Papers 7+12
Local Regulatory Framework Papers
- HKSI DPE Paper 2
- HKSI PPE Paper 1
- HKSI LE Papers 1*+5
-
HKSI DPE Paper 2
HKSI PPE Paper 1
HKSI LE Papers 1*+6
NASD Series 24
AIMR Chartered Financial
Analyst Designation
Diploma Courses provided by
SIA
SFA Registered Persons Exams
Examinations conducted by CSI
JSDA Representative of Public
Securities Course
1) * Not required for a licensed representative applying to be a responsible officer.
2) There is no competence requirement for a Type 7 (providing automated trading
services) regulated activity.
19
Appendix C (cont’d)
Table 2 – Recognized Industry Qualifications and Local Regulatory Framework
Papers versus Regulated Activities (Representative)
RA
1,4,8
Country
Hong
Kong
Recognized Industry Qualifications
- HKSI DPE Papers 1+3
- HKSI LE Papers 7+8
- HKSI FPE Paper 2
US
-
Australia
-
2,5
UK
-
Canada
-
Japan
-
Hong
Kong
-
NASD Series 24
AIMR Chartered Financial Analyst
Designation
NASD Series 7
AIMR Chartered Financial Analyst
Exam Level 1 Passed
Diploma Courses provided by SIA
(in securities)
Certificates provided by SIA (in
securities)
SFA Registered Persons Exams (in
securities)
Examinations conducted by CSI
(in securities)
JSDA Representative of Public
Securities Course
HKSI DPE Papers 1+3
HKSI LE Papers 7+9
HKSI FPE Paper 3
Local Regulatory Framework Papers
- HKSI DPE Paper 2
- HKSI PPE Paper 1 (+2 for SEHK
participant engaging in RA1)
- HKSI FPE Paper 1
- HKSI LE Paper 1
-
US
-
Australia
-
UK
-
Canada
-
NASD Series 3
AIMR Chartered Financial Analyst
Designation
AIMR Chartered Financial Analyst
Exam Level 1 Passed
Diploma Courses provided by SIA
(in derivatives)
Certificates provided by SIA (in
derivatives)
SFA Registered Persons Exams (in
derivatives)
Examinations conducted by CSI
(in derivatives)
20
HKSI DPE Paper 2
HKSI PPE Paper 1 (+3 for HKFE
participant engaging in RA2)
HKSI FPE Paper 1
HKSI LE Paper 1
Appendix C (cont’d)
RA
3
Country
Hong
Kong
US
6
Hong
Kong
US
Recognized Industry Qualifications
- VTC Leveraged Foreign Exchange
Trader’s Responsible Director
Examination Paper 2
- VTC Leveraged Foreign Exchange
Trader’s Representative
Examination Paper 2
- AIMR Chartered Financial Analyst
Designation
- HKSI DPE Papers 1+3
- HKSI LE Papers 7+11
- HKSI FPE Paper 2
-
Australia
-
9
UK
-
Canada
-
Japan
-
Hong
Kong
-
US
-
Australia
UK
Canada
Japan
Note:
-
NASD Series 24
AIMR Chartered Financial Analyst
Designation
NASD Series 7
AIMR Chartered Financial Analyst
Exam Level 1 Passed
Diploma Courses provided by SIA
(in securities)
Certificates provided by SIA (in
securities)
SFA Registered Persons Exams (in
securities)
Examinations conducted by CSI
(in securities)
JSDA Representative of Public
Securities Course
HKSI DPE Papers 1+3
HKSI LE Papers 7+12
HKSI FPE Paper 2 and/or 3
Local Regulatory Framework Papers
- VTC Leveraged Foreign Exchange
Trader’s Responsible Director
Examination Paper 1
- VTC Leveraged Foreign Exchange
Trader’s Representative
Examination Paper 1
-
HKSI DPE Paper 2
HKSI PPE Paper 1
HKSI FPE Paper 1
HKSI LE Paper 1
-
HKSI DPE Paper 2
HKSI PPE Paper 1
HKSI FPE Paper 1
HKSI LE Paper 1
NASD Series 24
AIMR Chartered Financial Analyst
Designation
NASD Series 7
AIMR Chartered Financial Analyst
Exam Level 1 Passed
Diploma Courses provided by SIA
Certificates provided by SIA
SFA Registered Persons Exams
Examinations conducted by CSI
JSDA Representative of Public
Securities Course
1) Qualifications and exams that are shaded are also applicable to responsible officer.
2) There is no competence requirement for a Type 7 (providing automated trading
services) regulated activity.
21
Appendix C (cont’d)
Key:
AIMR
CSI
DPE
FPE
HKFE
HKSI
JSDA
LE
NASD
PPE
SEHK
SFA
SIA
VTC
The Association for Investment Management and Research
The Canadian Securities Institute
HKSI Diploma Programme Examination
HKSI Foundation Programme Examination
Hong Kong Futures Exchange Limited
Hong Kong Securities Institute
Japan Securities Dealers Association
HKSI’s Licensing Examination for Securities and Futures Intermediaries
The National Association of Securities Dealers, Inc.
HKSI Financial Market Principal Programme Examination
The Stock Exchange of Hong Kong Limited
The Securities and Futures Authority
The Securities Institute of Australia
The Financial Services Development Centre of the Vocational Training Council
RA
Type 1
Type 2
Type 3
Type 4
Type 5
Type 6
Type 7
Type 8
Type 9
Regulated Activity
Dealing in Securities
Dealing in Futures Contracts
Leveraged Foreign Exchange Trading
Advising on Securities
Advising on Futures Contracts
Advising on Corporate Finance
Providing Automated Trading Services
Securities Margin Financing
Asset Management
22
Appendix D
Exemptions from the Recognized Industry Qualification Requirement
I.
Full Exemption
An individual may obtain full exemption from the recognized industry
qualification requirement if he:
1
2
(1)
has been licensed under the SFO within the past 3 years or is a current
licensee and now applies to carry on a regulated activity or is to be a
relevant individual engaging in a regulated activity with the same
competence requirement1 and in the same role2 as previously licensed.
An example is for a person who is licensed to carry on a Type 1
(dealing in securities) regulated activity applies to carry on a Type 4
(advising on securities) regulated activity; or
(2)
similar to the above, has been a relevant individual within the past 3
years after the commencement of the SFO or is a current relevant
individual of a registered institution and now applies for a licence, or is
to be engaged by a registered institution, to carry on a regulated activity
with the same competence requirement1 and in the same role2 as
previously engaged.
See Appendix C of these Guidelines.
Responsible officer versus representative.
23
Appendix D (cont’d)
II.
Conditional Exemption
(3)
Under very exceptional circumstances, an individual may apply for
conditional exemption from the recognized industry qualification
requirement if he is a current licensee who has 5 years of related
experience over the past 8 years and now applies to carry on a regulated
activity with different competence requirement1 but in the same role2.
For example, if the sponsoring corporation is licensed to engage in a
Type 1 (dealing in securities) regulated activity and a restricted Type 2
(dealing in futures contracts) regulated activity, such as acting as an
introducing broker only, the accredited individuals may be granted with
such exemption.
Conditions to be Imposed
The SFC would consider imposing a restriction on the scope of
activities to be undertaken by the individual (e.g3. to act for an
introducing broker only) or any other conditions deemed
necessary.
Undertakings to be Provided
The individual must complete an additional 5 CPT hours in
industry/product knowledge in respect of the new regulated
activity which is a one-off requirement. These additional CPT
hours may be taken within 6 months preceding the application, in
which case, the application should be accompanied by
documentary evidence. Alternatively, he may take the additional
CPT hours within 12 months after the approval is granted, in
which case, an undertaking to this effect has to be provided by the
sponsoring corporation.
1
2
3
See Appendix C of these Guidelines.
Responsible officer versus representative.
The examples set out here are not exhaustive.
24
Appendix E
Exemptions from the Local Regulatory Framework Paper Requirement
I.
Full Exemption
An individual may obtain full exemption from taking the local regulatory
framework paper if he:
1
2
(1)
has been licensed under the SFO within the past 3 years or is a current
licensee and now applies to carry on a regulated activity or is to be a
relevant individual engaging in a regulated activity with the same
competence requirement1 and in the same role2 as previously licensed;
(2)
has been a relevant individual within the past 3 years after the
commencement of the SFO or is a current relevant individual and now
applies for a licence, or is to be engaged by a registered institution, to
carry on a regulated activity with the same competence requirement1
and in the same role2 as previously engaged;
(3)
applies for temporary licence to engage in a Type 1, 2, 4, 5 or 6
regulated activity;
(4)
is to be temporarily engaged by a registered institution in a Type 1, 2, 4,
5 or 6 regulated activity; or
(5)
has been actively involved in regulatory or compliance work in Hong
Kong in the relevant industry for not less than 3 years over the past 6
years.
See Appendix C of these Guidelines.
Responsible officer versus representative.
25
Appendix E (cont’d)
II.
Conditional Exemption
(6)
3
An individual may obtain conditional exemption from taking the local
regulatory framework paper if he can demonstrate all of the following:
(a)
Experience. The individual has proven substantial related
experience but simply lacks the required level of local regulatory
exposure. “Substantial” means having at least:
(i) 8 years related experience in recognized markets (with
reference to Parts 2 and 3 of Schedule 1 to the SFO); or
(ii) 6 years related experience with at least 2 years licensed or
being an executive officer or relevant individual of a
registered institution in Hong Kong;
with some part of it gained in the recent 3 years.
(b)
Restriction of Permitted Activities.
(i) Applicant is either only involved in a limited scope of
activities for the sponsoring corporation or only assuming a
very senior management level role (e.g. 3, Regional Research
Head coming to Hong Kong occasionally and is
accompanied by other local licensed staff in client meetings,
persons providing technical advice to clients on the
structuring of corporate finance deals); or
(ii) The sponsoring corporation will only be carrying on a
limited scope of business activities.
(c)
Regulatory Support from Other Personnel. There is at least one
approved responsible officer at the sponsoring corporation who is
licensed in the relevant regulated activity, and would be directly
reporting to or otherwise responsible for advising the applicant as
well as supervising the daily operations of the regulated activity.
This approved responsible officer should be designated by name
to the SFC and replaced with someone else equivalently approved
if the designated person changes job functions or employers.
Instead of notifying the SFC whenever there are changes in the
designated persons, the sponsoring corporation should provide an
undertaking to the SFC that it has a system to maintain records
whereby these designations are kept current to reflect personnel
changes so that it can be inspected by the SFC if needed and that
if there is no designated person available, the sponsoring
corporation and the exempted individual will immediately inform
the SFC.
The examples set out here are not exhaustive.
26
Appendix E (cont’d)
(d)
Internal Control System in Place. The sponsoring corporation has
in place an appropriate risk and regulatory compliance
infrastructure (including a comprehensive risk management
system, internal audit, compliance staff and procedures).
Conditions to be Imposed
The SFC would consider whether it is necessary to impose any
conditions on the sponsoring corporation and/or the individual to
provide extra regulatory comfort. Example of conditions may
include a restriction on the business activities (e.g.3, the
individual’s activities are all confined within the same group of
related companies, or the individual does not engage in any
activities with retail clients). This is to ensure that any exemption
granted is on a limited basis with respect to the activities of the
applicant and of the sponsoring corporation.
Undertakings to be Provided
The SFC may request the sponsoring corporation and/or the
individual to provide undertakings as and when appropriate. For
instance3,
•
to ensure that the sponsoring corporation has suitably
qualified back office staff (including finance, compliance,
and audit staff); and
•
3
to require the individual as well as the sponsoring
corporation to update the SFC in the event there is any
significant change to the underlying circumstances
including the job functions or the regulated activity he
engaged in, the sponsoring corporation’s business activity
relevant to the individual or changes in any designated
licensed or support personnel.
The examples set out here are not exhaustive.
27
Appendix E (cont’d)
The individual must complete an additional 5 CPT hours in
regulatory knowledge in the relevant regulated activity which is a
one-off requirement. These additional CPT hours may be taken
within 6 months preceding the application, in which case, the
application should be accompanied by documentary evidence.
Alternatively, he may take the additional CPT hours within 12
months after the approval is granted, in which case, an
undertaking to this effect has to be provided by the sponsoring
corporation.
After the individual has obtained the conditional exemptions for 3
years, the requirement for a designated responsible officer to
provide regulatory support will be removed and the undertaking to
this effect will lapse.
(7)
Itinerant professionals4 who perform regulated activities in Hong Kong
may be exempted from taking the local regulatory framework paper
subject to the following conditions and undertakings:
Conditions to be Imposed
Not to carry out the regulated activities in Hong Kong for more
than 30 days in each calendar year; and
Shall at all times be accompanied by a licensed person (or, in the
case of a registered institution, by a relevant individual of the
institution) in performing regulated activities in Hong Kong.
Undertakings to be Provided
The sponsoring corporation should provide an undertaking that it
will assume full responsibility for the supervision of the
individual’s activities during his stays in Hong Kong, to ensure
that the individual will comply at all times with the relevant rules
and laws.
4
Itinerant professionals are individuals from overseas who need to repeatedly visit Hong Kong on business
for a short period each time.
28
Appendix E (cont’d)
III.
Conditional Exemption for Representative Only
(8)
A representative who has been licensed under the SFO within the past 3
years or is a current licensee and now applies to carry on a regulated
activity with different competence requirement1 may apply for a
conditional exemption from taking the local regulatory framework
paper relevant to the new regulated activity. For example, a
representative licensed to carry on a Type 1 (dealing in securities)
regulated activity applies for a Type 2 (dealing in futures contracts) or
Type 3 (leveraged foreign exchange trading) regulated activity can
apply for conditional exemption.
Undertakings to be Provided
The individual must complete an additional 5 CPT hours in
regulatory knowledge in the relevant regulated activity which is a
one-off requirement. These additional CPT hours may be taken
within 6 months preceding the application, in which case, the
application should be accompanied by documentary evidence.
Alternatively, he may take the additional CPT hours within 12
months after the approval is granted, in which case, an
undertaking to this effect has to be provided by the sponsoring
corporation.
1
See Appendix C of these Guidelines.
29
Appendix E (cont’d)
IV.
Conditional Exemption for Responsible Officer Only
(9)
A responsible officer who has 5 years related experience over the past 8
years and now applies for approval to engage in a regulated activity
with different competence requirement1 may apply for a conditional
exemption from taking the local regulatory framework paper relevant to
the new regulated activity.
Conditions to be Imposed
The SFC would consider imposing restriction on the scope of
activities to be undertaken by the individual or any other
conditions deemed necessary.
Undertakings to be Provided
The individual must complete an additional 5 CPT hours in
regulatory knowledge in the relevant regulated activity which is a
one-off requirement. These additional CPT hours may be taken
within 6 months preceding the application, in which case, the
application should be accompanied by documentary evidence.
Alternatively, he may take the additional CPT hours within 12
months after the approval is granted, in which case, an
undertaking to this effect has to be provided by the sponsoring
corporation.
(10) A licensed representative applying for approval to become a responsible
officer for the same regulated activity may apply for conditional
exemption(s) from taking the relevant local regulatory framework
paper(s) if he possesses at least 3 more years of relevant industry
experience in addition to the requirements set out in the Test of
Competence for Responsible Officer (see Appendix B of these
Guidelines).
1
See Appendix C of these Guidelines.
30
Appendix E (cont’d)
Undertakings to be Provided
The individual must complete an additional 5 CPT hours in
regulatory knowledge in the relevant regulated activity which is a
one-off requirement. These additional CPT hours may be taken
within 6 months preceding the application, in which case, the
application should be accompanied by documentary evidence.
Alternatively, he may take the additional CPT hours within 12
months after the approval is granted, in which case, an
undertaking to this effect has to be provided by the sponsoring
corporation.
31